Will I need Long Term Care Insurance?
This question is being asked more frequently by Baby Boomers and even the media. I’ve covered this topic before; but it’s important enough to address again.
I’ll answer this as one who is currently sitting on the fence because of several uncertainties.
- Given the economic lessons we’ve learned recently, what happens after my husband and I start paying premiums for long term care insurance (LTCI) and the company goes bankrupt or is bought by another company that doesn’t honor the insured’s rights?
- What if I begin paying the premiums now (I’m 50) and hit upon hard economic times later (like some recent retirees may be experiencing today) and can no longer pay the premiums? What if, for example, my husband becomes ill and can no longer work and I spend down our assets caring for him because he didn’t want LTCI. Do I lose everything? Or will I be refunded what I’ve paid in?
- Since I’m a tail-end Baby Boomer, what if there are newer care options I’d like to take advantage of that are not covered by the plan I sign up for today? For example, those who signed up for LTCI when it was initially offered were shocked to learn their benefits didn’t cover in-home care. While today’s plans offer in-home care and a wider assortment of options, will they be flexible to cover care programs not yet thought of?
The fact that even the LTC industry can’t satisfactorily answer these questions, keeps me from signing the dotted line.
Even so, I may be one of the few who believe the premiums are truly cost-effective given the benefit (assuming my policy covers the kind of care I desire when I need it).
The real question we need to answer (for ourselves) is:
WHY do I want long term care insurance?
- Is it to be able to afford the kind of care we want when we need it? (See item 3 above.)
- Is it so we can leave more assets to heirs or charities?
Right now, there are too many unknowns and I feel uncomfortable making the LTCI commitment.
Depending on what you read, the average nursing home stay is about 2.5 years. At about $65,000 a year, that’s about $163,000.
A decade ago, the complete cost of care for my father who was diagnosed with Alzheimer’s was about $280,000 for a little over five years. This included four years of nursing home care. We used his savings, figuring it was his money and should be used for his care.
For the rest of us, my advice is this:
- Develop deep and meaningful friendships that sometimes transcend (in some cases) the bonds of blood.
- Be good to people while you’re young and healthy.
- Think of others while you’re making your way in this world.
- Be sure your friends are younger than you.
When you’re old and need care, they will extend a hand to help you.
If you’re considering LTCI, take time to read the small print. Ask a lot of questions of all agencies, even those that come referred by reputable organizations such as the AARP or your credit union, company, etc. As for referrals. Ask your friends. Ask. Ask. Ask a lot of questions. A few other questions to ask include:
- At what age can I start receiving benefits? For example, what if I am diagnosed with early onset Alzheimer’s at age fifty two, can I start collecting benefits?
- Which conditions are covered by this plan? What if I’m diagnosed with a rare yet currently unnamed incapacitating disorder that leaves me unable to support myself? Will I be covered under this plan?
- What contingencies and unanticipated options does this plan provide?
After you get answers, take time to digest what you’ve read and think about it awhile. Don’t be pressured by premiums rising $5 next month because you didn’t sign the dotted line this month. It might be better to spend a little more (in this case $60 a year more) and make the right decision than to try to get in for pennies less and end up making a decision you’ll regret later.
For more information read:
TRENDS: Boomers and Long Term Care Insurance
Brenda Avadian, MA